Start-up Flexport creates disruption in freight forwarding

Flexport is a new example of how a software company can fully disrupt a traditional industry: global freight forwarding, in this instance. Thanks to the deployment of artificial intelligence, the entire process - from ordering to shipping - can be operated almost fully automatically.

Flexport tackled the lack of transparency in world-wide logistics to rapidly develop a system for global transhipment companies. The system provides businesses, ranging from multinationals to SMEs, the same insight into finding the most efficient way to get goods from point A to points B, C, X, Y, and Z.

‘We are bringing transparency to a black box industry,’ Ryan Petersen, founder and CEO of Flexport, said in a recent interview by TechCrunch. He created an overview of all the routes, rates, speeds, and customs compliance data. As the system evolves, more processes will be able to run fully automatically. In the past year, the volume of goods sent through Flexport grew by a factor of 16. This year, more than 700 customers in 64 countries shipped goods through Flexport, with a total value of more than 1.5 million dollars.

Business model

Flexport received 26.9 million dollars in funding for its development from Google Ventures, Bloomberg Beta and Ashton Kutcher, among others. Strangely enough, what Flexport does is not easy to copy. Petersen mentions DHL, which bought three of the biggest freight forwarders for 15 billion dollars and then spent almost another billion to have IBM devlop an IT backbone, which ended up becoming a complete failure. ‘They had to write it off completely.’

The most serious competitor of Flexport is a company called Expeditors. Although it has 1 billion dollars in cash to spend, it simply doesn’t have the right start-up mentality. Expeditors’ software is obsolete, with an interface that has its roots in the pre-GUI era. ‘Software is the differentiator,’ according to Peterson. Thanks to the deployment of artificial intelligence the entire Flexport process, from ordering to shipping, can be operated almost fully automatically.